Tuesday, November 28, 2006

So, you want to be an iPod?

Last week, Computerworld’s Mike Elgan wrote an article titled, “Zune: So you want to be an iPod killer.” In it, he talked about the things he thinks Microsoft needs to do with the Zune to make it a true competitor to the iPod. Although he made a number of good points, about both the Zune’s current flaws and how it could improve to mount a stronger challenge to Apple’s portable-player hegemony, I think Elgan’s main argument—that making the Zune work more like a Windows PC would result in a big win for Microsoft—is off-base.

At the risk of making this article look like a point-by-point message-board response, allow me to quote the statements with which I differ most significantly from Mr. Elgan, and offer my own views:

After all, the Mac is more elegant than Windows, but most people prefer Windows. And that’s how Microsoft can kill the iPod: Make the Zune more like a Windows PC.

The discussion of whether or not people actually prefer Windows is one for another site. Elgan’s second claim is more relevant to Playlist, and where I think he’s pointing in the wrong direction. People don’t want their portable players to act like computers; on the contrary, the iPod has succeeded in large part because it’s dead-simple to use—because it’s not like a Windows PC. (Trust me; if the iPod worked more like Windows, Creative Labs would be dominating the portable-media-player market.) Yes, there will always be an über-geek cadre out there that wants a computer in the palm of their hand, but for the vast majority of the market, simple sells. This has been demonstrated time and time again in the gadget industry: Palm, the iPod, TiVo, you name it—once someone made a particular type of gadget simple and fun, that product took off, even if it had fewer features than its competition.

Apple’s closed, our-way-or-the-highway approach to locking everything down stifles innovation and customization. Some of the biggest iPod fans go to great lengths to overcome Apple’s controls and modify their iPods. Just check out iPod Hacks, a site devoted to voiding iPod’s warranty and bypassing Apple’s strict gadget lockdown. Many of the hacks involve the installation of Linux with a special iPod interface called Podzilla.

Again, we’re talking über-geeks here. Apple has sold north of 70 million iPods; I’d wager that the number of people who install Linux or otherwise hack their iPods is in the low four digits. And this isn’t an iPod-only phenomenon: go to the “enthusiast” sites for any popular, easy-to-use product—TiVo, Palm, PlayStation, Xbox, you name it—and you’ll find a tight-knit, dedicated group of people intent on putting that product to uses the vendor never intended. But that group will be tiny compared to the number of people using the product as it was intended.

This is what people do, even when Apple bans it. Imagine what would be possible if Microsoft encouraged modification of the Zune.

True, there would likely be some very cool tweaks/hacks if Microsoft opened up the platform. But I just don’t buy the claim that doing so would significantly increase the Zune’s market share. The number of additional consumers Microsoft would attract to the Zune by “geeking it up” would still pale in comparison, in my estimation, to even the number of non-geek Zune buyers—let alone the number of iPod owners.

Don’t believe me? Consider the Palm. It’s still the best-selling PDA, and it offers a wide-open development environment. There are thousands of third-party applications and tweaks that let you do nearly anything you might want to do. And it’s a product purchased by a disproportionate percentage of tech-minded folks compared to the iPod. Yet as far as I can tell, the vast majority of Palm users rarely, if ever, install third-party software; they use their PDA as, well, as PDA.

In fact, Palm is an especially good case study for this discussion. Back in the ’90s, Palm held a position not unlike the iPod’s current market dominance—it was the handheld/PDA. What eventually cut into Palm’s marketshare was, interestingly enough, mobile versions of Windows. But not because of more geeky/gadgety features or more expandability; rather, because mobile versions of Windows have offered better integration with Windows itself and the Windows-based applications most people use on their computers. In other words, by making syncing and other computer-to-PDA interactions easier and more seamless.

Which leads me to the danger Microsoft would face by simply making the Zune a “development platform”: If in the process of encouraging tweaks and modifications, Microsoft muddies up the Zune’s interface or adds lots of features your typical consumer won’t use, the company could run the risk that even fewer people, overall, will buy the Zune. These features would need to be cleverly hidden so they don’t confuse users. Unfortunately, that’s not Microsoft’s strength; it’s Apple’s.

Let people transform the Zune into an Xbox game controller, a TV remote control, a portable presentation device, a wireless PC hard drive or a Vista gadget emulator. Give me a wireless keyboard and a Zune version of Pocket Outlook, and I’ll never buy another iPod.

This is more the territory of Palm- and Windows-powered PDAs than music players. In fact, much of this functionality is already available in current PDAs—why reinvent the wheel? Given that far more people want iPods than want PDAs, wouldn’t a better approach be for PDAs to improve their media-playing abilities, so those who want a PDA can get by without having to buy an iPod?

Build ClearType into Zune and make it the ultimate eBook reader (and sell eBooks on Zune Marketplace).

As someone who’s put the iPod’s Notes feature through its paces many a time, I can tell you that the last place I want to read a good book is on a 320- by 240-pixel screen. Don’t get me wrong; I think eBook readers are (eventually) going to be big. However, the ones that will make it will have significantly larger screens that are easy to read—using them will be just like carrying a real book around. Portable music players, on the other hand, are popular when they’re small.

History shows that the functionality of stand-alone gadgets always gets folded into multipurpose devices. Apple’s instinct to maximize elegance at the expense of extensibility made them No. 1 in the media player market, but the future belongs to customizable, multifunction players.

As a Playlist reader noted in our forums, this isn’t a convincing argument; there are just as many examples that show standalone gadgets are preferred to multipurpose devices. The iPod is Exhibit No. 1—how many people do you know who own an MP3-playing mobile and an iPod? Right now, the iPod is so much better than any music-playing phone at, well, playing music that people are willing to carry both. (That’s not to say there won’t ever be a phone that can compete with the iPod, but, to beat the dead horse, when it happens, it will be because that device is easy to use, not necessarily because it has more features.) For another example, check out the sales numbers for dedicated printers vs. multi-function (print/fax/copy/scan) machines; the former significantly outsell the latter. In general, there are pros and cons for both standalone and “convergence” devices, but I don’t think it’s the case that the latter will always be the best or most popular approach.

Microsoft will never beat Apple at its own game. But the reverse is also true: Apple can’t win at the Microsoft game. If Microsoft turns Zune into a media-optimized, extensible mini-PC that really works, the iPod is as good as dead.

The key here is “really works.” And by that, I don’t mean “has the most functionality.” I mean “works so that the typical person will be able to use it, and will embrace it.” And creating such products is, again, Apple’s true strength, not Microsoft’s.

To be fair, I think there is a market for the sort of “super-convergence” devices Mr. Elgan proposes. But, like the high-end PDA market, it’s a much smaller market than the one for portable media players. Geeks love such gadgets, but geek love doesn’t sell 70 million units—or even a good chunk of that.

On the other hand, I do agree with Elgan that there’s an opening for Microsoft—or Apple, Nokia, Samsung, Sony Ericsson, or any other vendor in this space—in the convergence of phone, PDA, and media player. After all, who likes having to carry around multiple devices? But the thing is, people don’t want “convergence” devices just for the sake of lightening their load; they still prefer dedicated devices if it means that each is easy to use. If a company can come up with a single device that combines the features of a phone, a PDA, and a media player, and make it as easy to use as each of the best of their kind are now—or even nearly so—and offer it at a reasonable price, I think it will do well.

But that’s a formidable challenge, and simply geeking up the Zune isn’t the solution. The iPod is the phenomenon it is because it’s easy to use and does—very well—precisely what it was designed to do. And in that respect, Mike Elgan is right that Microsoft won’t beat the iPod at its own game; it needs to go beyond the iPod. The challenge for Microsoft and others will be to add features that most people want—features that people will actually use—and to do so in a way that doesn’t result in a device that’s like... well, like Windows.